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Olympic Industries’ profit slumps to seven-year low on high production cost

It plans to invest Tk 247.5m to set up new instant noodles lines

BABUL BARMAN | October 29, 2022 00:00:00

The net profit of Olympic Industries Limited slumped to nearly Tk 1.21 billion in fiscal year (FY) 2021-22, the lowest in seven years, dented by higher production cost and rising raw materials prices.

The country's leading biscuit maker has reported a profit after tax of Tk 1.21 billion for the year ended on June 30, 2022, down 41 per cent from the previous year's net profit of Tk 2.04 billion.

Accordingly, its earnings per share (EPS) dropped to Tk 6.03 in FY 2021-22, as against Tk 10.19 in the last fiscal year.

This year's net profit was the lowest in seven years since FY 2015-16, when the company's net profit was Tk 1.62 billion, according to the company's financial reports. In FY 2014-15, the company's net profit was Tk 1.09 billion,

The company's net profit was Tk 2.02 billion in FY 2019-20, Tk 1.87 billion in FY 2018-19, Tk 1.79 billion in FY 2017-18 and Tk 1.64 billion in 2016-17.

At its meeting on Thursday, the board of directors recommended 45 per cent cash dividend for the year ended on June 30, 2022. In 2021, it paid out 54 per cent cash dividend.

The board has also decided to invest Tk 247.5 million to set up a second instant noodles lines to expand its annual production capacity from 8,316 tonnes to 19,008 tonnes.

The company's sales, however, rose 19 per cent to Tk 21.44 billion in FY 2021-22, up from Tk 18.03 billion in the previous fiscal year.

The cost of raw materials, including oil, sugar and flour rose significantly but the price of finished products remained almost the same, which ultimately impacted the profits, said a company official, requesting anonymity.

The prices of sugar and flour rose on the international market and so, there was no way to avoid the price hike, he said.

As a result, the cost of production of biscuits and confectionary items shot up 30 per cent to Tk 16.52 billion in FY 2021-22, up from Tk 12.75 billion in the same period last year.

Profitability of the company declined substantially due to Russia-Ukraine war, ongoing foreign exchange volatility, rising prices of raw materials, high inflation and decrease of real income of common people, said the company in a disclosure.

The net operating cash flow per share (NOCFPS) was Tk 3.51 for FY 2021-22 as against Tk 9.34 for FY 2020-21.

The net asset value (NAV) per share was Tk 46.84 as on June 30, 2022, which was Tk 46.21 on June 30, 2021.

On Thursday, the stock price of Olympic Industries rose 2.08 per cent to close at Tk 115.70 on the Dhaka Stock Exchange (DSE).

Its paid-up capital is Tk 1.99 billion, authorised capital is Tk 2.0 billion and the total number of securities is 199.94 million.

Sponsor-directors hold 37.31 per cent stake, institutes 22.96 per cent, foreigners 20.54 per cent and the general public 19.16 per cent as of September 30, 2022, the DSE data show.

The company has expanded by about 15 per cent annually over the past few years.

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